external auditing is characterized by the hiring of independent minded external auditor to give an opinion as to the fairness of the financial statement items. the purpose of external auditing is to give credence to the financial statement assertions prepared by the management of the company…
the statutory audit report is a must for the company in the presentation of their balance sheet, income statement and statement of cash flows.
The standard statutory audit is characterised by an auditor performs normal auditing procedures to show that the financial statements are more credible than if no external auditor's opinion is attached. The statutory audit is implemented in order to prevent frauds and illegal acts.
As proof,Enron's income statement was window dressed. The company had recorded sales transactions that had never happened. Consequently, these fraudulent transactions would translate to higher sales. Higher sales would give a higher net income. a higher net income would give us a higher net assets. a higher sales would generate a higher stockholders' equity. In addition, the company did not record some of its losses. Enron had fraudulently window -dressed by presenting these Enron losses as losses of its off -shore companies. as a result, the unrecorded losses resulted to a net income that is higher than what the real net income should be. Convincingly, Enron's income statement was window dressed (Fusaro, and Miller 2002, 107)
Also, Enron and Arthur Andersen knew that recording fictitious sales and profits would increase stockholder investments. Enron and Arthur Andersen knew that recording fictitious sales and profits would increase stockholder investments. Enron and Arthur Andersen knew that recording fictitious sales and profits would increase stockholder investments. The senior management officers connived with the accounting officers of Enron to prepare the fraud -laden financial statement in complete violation the harmonization standards set by violating the international accounting standards accomplish this fraudulent goal. Clearly, Enron and Arthur Andersen knew that recording fictitious sales and profits would increase stockholder investments (Madrick 2002).
urthermore, the WorldCom and Enron accounting scandals are two of the reasons that triggered the approval of the Sabarnes -Oxley Law. The company was a communications company that had risen to profitability during the 1990s. However, the company found its profitability had slowly declined in the early 2000s. This is the largest accounting scandal in history. The officers of WorldCom entered tried to window dress their stock market price. The company's stock market price had decreased because company profits started to decline. The officers, specifically CEO Bernie Ebbers and CPA Scott Sullivan had to prepare false financial statements indicating that their sale and profits were higher than the real sales and profits would show in order to stave the decline of its stock market share price Zekany, Braun, and Warder 2004). Similar to Enron, the company's external auditor, Arthur Andersen, did not comply with generally accepted auditing standards to prevent or curtail material misstatements of the income statement and the corresponding balance sheet. The WorldCom fraudulent activities occurred from 1999 to 2002 (Ettredge et al., 1). ...
Cite this document
(“Audit framework Essay Example | Topics and Well Written Essays - 1500 words”, n.d.)
Retrieved from https://studentshare.net/miscellaneous/293835-audit-framework
(Audit Framework Essay Example | Topics and Well Written Essays - 1500 Words)
“Audit Framework Essay Example | Topics and Well Written Essays - 1500 Words”, n.d. https://studentshare.net/miscellaneous/293835-audit-framework.
It describes the least provisions for conduct, and behavioural prospect relatively than precise actions. The idea of system of moral values is towards encouraging the moral traditions inside a career of internal auditing. Internal auditing is an autonomous, intention pledge, a consult action considered towards inserting importance as well as progress the organization operation.
At the turn of 21st century, there happened a number of scandals such as WorldCom, Enron which made people question the integrity of the audit profession. The most respected firm Arthur Anderson, which was the audit firm for Enron, was finished. This led to a stronger demand for supervision of auditing practices.
However, the fact that the underlying principle in auditing is the concept of ‘opinion’, leaves the process of auditing with much to be desired, considering that conflict of interests or biased opinions have arisen from the auditing firms in relation to the truthfulness and accuracy of the transactions and financial reporting of their clients, eventually resulting to financial crisis, scandals and company failures that could eminently have been avoided, should the auditing reporting and opinion have been fair and balanced (Deloitte, 2012 p2).
The external auditor is a person who is hired by the company to give an auditor's opinion as to the correctness or fairness of the financial statements. When the auditor sees that if the representations in the financial statements are in violation of International Accounting Standards, then the auditors recommends the adjustments that must be made to correct or set into order the financial data found in the balance sheet, income statement, statement of cash flows and others.
It also provides the actual objectives of such reporting as well as the effectiveness of audit opinion conveyed through audit reports.
Audit report is basically the submission of auditors of an audit conducted by them. It is usually in a form approved by accounting professional bodies.
Overall, the Bank has demonstrated high quality of service commitments to their customers while successfully reducing their operating costs. In this Financial Year, the Bank has invested in technology enhancements such
There are two major perceptions on the external audit report. First, the audit report affirms whether the financial reports are fairly presented, true, qualified or adversely reported. Second, the audit report must be enhanced in order to keep abreast of the new
6 Pages(1500 words)Essay
GOT A TRICKY QUESTION? RECEIVE AN ANSWER FROM STUDENTS LIKE YOU!
Let us find you another Essay on topic Audit framework for FREE!